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Hi John
How would you calculate future cash inflows of a two year time period when you are given:
Investment of a project: $50 million
Cost of Capital: 8%
Sales: 670
cost of sales : 335thanks
You have not given enough information.
If the sales and cost of sales are in $ millions per year, then the net cash inflow each year is 670 – 335 = $ 335M
It is unlikely that this is the case given the amounts, but without more information it is impossible to say more.
However, this is completely irrelevant for Paper F5 anyway, because cost of capital and discounted cash flow is not examinable in Paper F5.
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